First Quantum Minerals Ltd. (TSX:FM) announced Wednesday morning it has suspended construction of its copper and cobalt mine in the Democratic Republic of Congo (DRC).
It claims local government is illegally interfering with the company's operations.
First Quantum's share price on the Toronto Stock Exchange was down roughly 6% to $70.17 at mid-day following the announcement.
The suspension occurred after the general prosecutor of Katanga province ordered Kingamyambo Musonoi Tailings SARL (KMT), a Congolese company majority-owned by First Quantum, to seal its facilities.
First Quantum said in a release that its lawyers have advised it that the prosecutor's order is illegal, as it was issued without a court order and is simply referring to the "spirit" of a letter written by the general attorney.
According to First Quantum, that letter was sent to the company and detailed the possibility of revisiting the mining contract.
The letter, said First Quantum, also tried to establish the basis on which the Kolwezi Project may be cancelled.
Following the suspension, First Quantum has filed notices of force majeure in a bid to free itself from the contract with the DRC.
Construction of the mine is approximately 65% complete and was on schedule to be commissioned in May 2010.
The project is indefinitely delayed and roughly 700 jobs in the Kolwezi area will be lost.
The company is preparing to file for international arbitration.
First Quantum's share price this week ranged up to $72.10; 52-week high: $77.07; 52-week low: $12.75